504 Loan Blog: Curated by Mercantile Capital Corporation

504 Loan Blog

Lessons from Capitol Hill: How NOT to Negotiate…
  • more-shares
    • Save on Delicious

Lessons from Capitol Hill: How NOT to Negotiate

Even though 2013 is now three days old, let me officially wish you a Happy New Year! Like me, I’m sure you can look back at 2012 and see the varying highs and lows that have brought us to where we are now, but let’s not dwell too long on the past. Let’s learn what we can from the successes and failures of last year, and then look forward to what we can accomplish and achieve in the New Year.

My first blog post of 2013 comes courtesy of my business partner — Mercantile’s Chairman of the Board, Geof Longstaff. He’s the elder statesman of our company, and I value his perspective and opinions on many issues. Yesterday, the first work day of the New Year, Geof sent an all-staff email about the recent fiscal cliff negotiations and how we can learn from them. As usual, there are a few poignant business principles we should all examine and apply to our lives and businesses, so I’d like to share them with you. The following are Geof’s words, and I encourage you to read them carefully and take them to heart.

————————————

I am repeatedly asked how I feel about 2013 with all the upheaval in Washington and all the uncertainty that surrounds our daily lives. The negativity that is pervasive in the print media and talk media is overwhelming and the apparent inability to even be civil to one another in Washington just goes against my core values. Yet, in spite of this I am unequivocally Positive in my feelings about the future. Why? Because the future is all about Me and You.

First, I believe I won the lottery because I was born an American and, in spite of all our problems, this is still the greatest country in the world in which to practice individual freedoms. While others believe their ability to succeed is based upon the happenings of others or the actions of the government, I believe my success is based on my own God-given talents to just make it happen. I work with a great bunch of people who share this ability to succeed and accomplish things in spite of the environment. While I know we have to deal with individuals on the outside who don’t share this sense of accomplishment, I know that all of us feel we are in control of our own destinies. For that, I am eternally grateful and I am proud to work with such a dedicated group of people who (as Nike says) “just do it.” Now let’s go out and do just that.

This weekend, I paid pretty close attention to the “fiscal cliff” negotiations in Washington that have been ongoing ever since the election. Wow, if you ever want a lesson in “How not to negotiate” this was a textbook case. Since much of our business practice involves negotiation, I thought it would be helpful to learn from a high profile situation that went terribly wrong. First, understand one thing. This was an odd negotiation, because usually in a simple negotiation one person or party receives something and the other person gets paid an equal amount in some sort of payment. The sale of real estate is a great example, as one person gets the property and the other party gets money, and the negotiation is all about the price. In this case the two parties were negotiating over issues that all the parties were going to have to live with as the results affected the entire populace, albeit to different degrees. I liken it to two grandchildren negotiating something on behalf of their joint grandmother. Both are supposed to have her best interests at heart. Alas, I digress.

The art of negotiation is not about lying, cheating or obfuscating your way into a more advantageous position. It is always about trust. How you handle yourself is very important. Once trust between the parties is lost, the process is doomed for failure and a poor ending. This was certainly the case in the events of this past week where all trust between the parties was lost and it took two old friends, who had built trust over many years, to make a deal. This is not to say that the process can’t be contentious and result in spirited debate; but in the end if trust is lost, then in spite of the outcome the parties will have a difficult road ahead. The lesson to be learned here is to keep your head, maintain your character to deal in good faith, and let the weight of your argument win the day. That does not mean that you can’t use obvious advantages to carry your cause; just let it be part of the weight of your argument.

Finally, negotiation should assume that success is driven by being willing to live by the agreement that you made and being of a mindset that you could negotiate again with this same person or party. Certainly there are negotiations which don’t go this way and once it is over you pledge, for whatever reason, not to do business with this person again. However, in the Congress, we elect people for terms and they must be responsive for that entire term. To use the media to lambast your opponent, or to spike the ball with chants of victory, or to publicly swear at a member of the opposition — those things only serve to entrench the other side and make future contact more difficult. I can’t say how unimpressed I am about the leadership in Washington. The only saving grace is the fact that both sides got up from the table unhappy with the final results, and that is probably a sign that the deal was pretty balanced.

Lesson to be learned: Negotiation is an art but there are certain tenets which we can incorporate in our business life as well as our personal life. Keep your cool (I personally have trouble with this one); be passionate about your position without being argumentative; be honest and forthright in keeping with your character; and act respectfully when it is over, whether you are the winner or the vanquished.

Have a great 2013.

Geof

Tags: , , , , , , , , , ,

2 Comments

  1. Paul Stout says:

    Been watching this one from a pure negotiating perspective myself – it will certainly help fuel many discussions surrounding the right and wrong ways to negotiate. – Your take on it is insightful – Thanks

  2. Eugene P. Grace says:

    I completely agree with Mr. Longstaff’s assertion that we are lucky to be living in the United States, even with all of its problems. Americans have a history of succeeding even when that means overcoming governmentally-erected hurdles. However, I have a different perspective on the art of negotiation, an art that I have practiced for many years. Negotiating is all about keeping your options open by maintaining leverage over the other party.

    Regarding the “fiscal cliff,” Democrats signaled in November a willingness and possibly a desire to go over the cliff. Following the election, Democrats began to believe that they could achieve a variety of priorities by taking the plunge. Democrats pursued a strategy of non-engagement with the belief that a shortened time horizon would create a sense of momentum and an imperative to get something done. However, after Christmas Day, Democrats began to shy away from the cliff concerned that the president, as the nation’s leader, might be held responsible for going over the edge. Republicans, however, were spooked by the fear of being blamed for cliff-diving. In these emotionally charged circumstances, Republicans failed to see that the pressure of limited time had spun around to their favor and could have been used to achieve additional concessions. Republicans probably felt that any further concessions would not have been meaningful and not worth potential disruption to economic markets. However, by pursuing a more aggressive line, Republicans could have established greater credibility for the main event, tackling the deficit.

Leave a Reply

Your email address will not be published. All fields required.

Back to all Entries